HMRC beefs up to tackle Britain's £32bn tax gap and a sweeping anti-avoidance is in the offing

The Government will employ a raft of measures to try and close Britain’s £32bn tax gap. Ministers will target individuals and corporations that minimise their tax bills by pushing income or profits offshore.

The measures were announced by Chancellor George Osborne last week in his Autumn Statement, but the details were published in full in yesterday’s Finance Bill. It follows Starbucks caving in to public pressure and agreeing to contribute £20m in corporation tax in the next 12 months.

The Government will bring in a ‘General Anti -Abuse Rule’ (GAAR), which aims to crack down on wholly artificial tax schemes used to slash an individual’s or corporation’s tax bill.

Beef up: As well as being bolstered with 2,500 extra tax inspectors, HMRC will see its powers boosted

This ‘will only impact on businesses participating in abusive schemes that give them an unfair advantage over businesses undertaking normal commercial transactions’, it said.

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When MPs on the Public Accounts Committee quizzed Starbucks, Amazon and Google last month, they raised concerns that paying no or little tax gave them a leg up over UK-based competitors.

The GAAR aims to deter from entering into such schemes, and said any arrangements that result in a lower tax bill have to be reconciled ‘on a just and reasonable basis’.

As well as being bolstered with 2,500 extra tax inspectors, HMRC will see its powers boosted. Currently the taxman only has limited authority when conducting a criminal investigation into tax evasion with police required to carry out some tasks.

But the legislation will enable tax authorities to enter homes and perform other functions normally carried out by police. It will also clamp down on manufactured payments, to stop businesses claiming double tax relief.